April 25 (Bloomberg) -- OAO Rosneft said a plan to step up
Arctic exploration will help increase shareholder value at the
same time the world’s largest publicly traded oil producer
starts exporting liquefied natural gas.

Rosneft will export its first LNG from a planned Far East
project in 2018. The producer, which is seeking to double gas
output by 2020, is targeting clients in Asia, where prices for
the fuel are higher.

LNG exports will “benefit the Russian economy,” Chief
Financial Officer Svyatoslav Slavinsky said in an interview in
London. “The development of the Arctic shelf is going to be one
of the pillars of the expansion of shareholder value.”

Chief Executive Officer Igor Sechin wants to boost
Rosneft’s market value by 60 percent to about $120 billion
within two years on increased production, exploration and
refinery modernization. Sechin, a long-time ally of President
Vladimir Putin, expects the Russian government to grant Rosneft
tax breaks to work in the Arctic and at hard-to-recover fields,
and end OAO Gazprom’s monopoly on LNG exports.

“We can’t speak for the government, but we certainly
expect they are going to be listening to various players
including us,” Slavinsky said. Russia is the largest
shareholder in Rosneft, followed by BP Plc, he noted. “We hope
that the regime will change” regarding LNG exports.

Gazprom operates Russia’s only LNG plant at Sakhalin
island. The world’s largest natural gas company, in which the
state is the largest shareholder, was granted an export monopoly
by law in 2006, restricting other producers to the domestic
market.

Production Upside

Sechin has joined calls “for the liberalization of LNG
exports,” analysts including Oleg Maximov at Moscow-based
Sberbank Investment Research, wrote in an e-mailed report. “The
company, interestingly, sees its production upside in the
expensive offshore gas fields and not the onshore
developments.”

Rosneft has set up ventures with Exxon Mobil Corp., Statoil
ASA, Eni SpA and China National Petroleum Corp. to explore
Russia’s Arctic shelf. BP CEO Bob Dudley said his company will
be also interested to work with the Russian company in the
region.

“Rosneft has a unique access to what it going to be the
future of unconventional and more difficult to extract
reserves,” Slavinsky said. “Rosneft will be interested in the
markets where it can create value, so far we can see this value
creation particularly in Asia.”

Rosneft, based in Moscow, has gas reserves totaling 5.8
trillion cubic meters, including 2.45 trillion cubic meters held
by TNK-BP and 344 billion cubic meters from the OOO Itera unit
it bought last year. That’s enough to supply the globe for about
20 months, according to Eni data.

Expected Savings

Rosneft closed its $55 billion takeover of TNK-BP from BP
and a group of billionaires on March 21, in Russia’s largest
acquisition. It expects $10 billion in “synergies” over 10
years, Slavinsky said.

Shares in TNK’s traded unit, OAO TNK-BP Holding, plunged 26
percent to a record on March 26 after Rosneft announced plans to
borrow money from the company, possibly by ending TNK-BP’s
dividend policy. TNK-BP Holding agreed to pay out about 60
percent of its earnings per share in dividends last year,
according to Bloomberg data.

“Sechin believes that even if TNK-BP had not been sold,
its previous owners would have had to change their generous
dividend policy sooner or later because the company’s assets
need considerable investments,” Alexander Kornilov, a Moscow-based analyst at Alfa Bank, wrote in an e-mailed report.

Rosneft is committed to a 25 percent dividend payout to
shareholders, Slavinsky said. The company is in talks with TNK-BP minority shareholders about future distributions.

“Our job and our duty as management is to work for all
shareholders in the company,” he said. “We are in discussions
with various shareholders who happened to be minority
shareholders at TNK-BP and Rosneft.”